Independent, high-quality journalism is hugely important. Knowing that what we’re reading is truthful and accurate and hasn’t been written with an ulterior motive is extremely valuable, and there are few better illustrations of that fact than the financial media.
There are some excellent journalists out there, who genuinely have the interests of consumers at heart. But the problem is that good stories and juicy headlines often result in worse outcomes for those who really matter.
Take investing, for example. Journalists need stories. But, entertaining though it often is, the day-to-drama of the financial markets is pretty meaningless. As anyone who understands behavioural finance will tell you, investors are better off ignoring the noise and focusing instead on their long-term objectives.
Then there’s the endless beauty parade of the latest products. Don’t get me wrong, I understand why this stuff gets written. After all, no one would buy a financial publication which reminded its readers each week they should simply invest in a broadly diversified portfolio of low-cost funds that reflects their capacity for risk and otherwise forget all about it.
Ultimately, financial publications are businesses, and by far their biggest source of income is from advertising. Asset managers very rarely advertise the boring, low-cost funds investors should be using; there’s much less money in it for them, for a start. More importantly, they have a vested interest in perpetuating the idea that expensive active management works for anyone other than themselves and the other intermediaries — brokers, consultants and so on — who benefit from its continued dominance.
To quote Barry Ritholtz, one of America’s most popular investment bloggers, there are truth seekers and truth obscurers. “One of the surprising things this blog has taught me,” Barry wrote last week, “is how long it takes Reality to go viral. There are entrenched interests opposed to the Truth; they release their grip on their subjective fantasies very, very slowly.”
This blog, Adviser 2.0, is a truth seeker. Yes, we have an agenda, like everyone else. We believe in evidence-based investing and that the future of the financial advice profession belongs to firms who base their investment philosophy on independent, peer-reviewed, academic research. We also believe that sound investment advice is just one of the ways in which an adviser adds value.
But our overriding aim is to seek the truth about investing and advice, and about how best to serve the consumer’s interests.
The question is, how can a service like this be paid for? Thus far, the time and effort we’ve spent on the blog has been entirely pro bono, but that’s not a sustainable situation. So we’ve explored a range of different ways of funding Adviser 2.0 and, after careful consideration, we’ve decided to form a strategic partnership with a like-minded business.
I am therefore delighted to announce that Sparrows Capital has agreed to partner with us and to help fund the content we produce. We’ve written about Sparrows before. Based in London, it manages assets for family offices, wealthy individuals and institutions. Its approach is simple and evidence-based. It uses low-cost ETFs and index funds to track global markets, and it doesn’t try to pick individual stocks and shares or attempt to beat the market.
I have no hesitation in endorsing Sparrows Capital and I’m very excited that Yariv, Steven, Mark, Elroy and the team are working with us.
Finally, I’d like to take this opportunity to thank our readers, and especially those who regularly share our content. Without your support, none of this would have been possible.
We have exciting plans for the blog which will start to unfold over the next few months. So watch this space, and remember that, together, we really can change investing and the advice profession for the better.